The trustee has been quoted to be the ‘archetype of a fiduciary’. The trustee and beneficiary relationship is the most traditional fiduciary relationship that exists. As a fiduciary, the trustee undertakes or agrees to act for or on behalf of or in the interests of a beneficiary in the exercise of a power or discretion, which will affect the interests of that beneficiary in a legal or practical sense.
One of the corporate trustee’s most fundamental duties is to ensure that it is aware of the terms of the trust instrument (commonly a deed) creating the trust and of the obligations under the Trustee Act 1936 (SA). Often when we have acted for a trustee or against a trustee, the trustee has not had a copy of the trust deed, nor were they aware of its terms.
The trustee must keep the original and stamped copy of the trust deed, including all amendments to that deed. A trustee must also, amongst other things, keep written records of any decisions made about the trust’s property and ensure that any distributions made out of the trust are recorded through a resolution of the trust. In the event advice is sought regarding distributions, they must have a copy of the trust instrument to ensure that they are aware of what distributions can be made pursuant to the trust deed.
However, above and beyond the terms of the trust instrument, trustees have a broader duty to maintain documents in relation to the administration of the trust. This is where many trustees fail in their duties and is the precursor to an application to remove the trustee.
Section 84B(1) of the Trustee Act 1936 (SA) (the Act) prescribes generally that:
“a trustee shall keep such records relating to the administration of the trust property as may be prescribed.”
For the purposes of section 84B, Regulation 5 of the Trustee Regulations 2011 (SA) (the Regulations) provides an extensive and onerous list of what records a trustee must keep with respect to the administration of the trust property. This list includes keeping (amongst other things):
A trustee ought to clarify with its legal and financial advisers who is responsible for maintaining each document because pursuant to section 17 of the Act, a trustee may delegate its duties and powers to any person in South Australia. However, it is the trustee’s ultimate duty to ensure all of those documents set out in Regulation 5 of the Regulations are maintained.
Beneficiaries have a right of access to documents that are kept by the trustee and may examine and make copies of those records. In circumstances that a beneficiary does exercise its rights to examine the records of the trust and there are either no records being kept or those records that are being maintained amount to misconduct, a beneficiary may apply to the Court to appoint an inspector. An inspector is appointed to investigate the administration of the trust.
In the event that an inspector is appointed, he/she has broad powers that enable him/her to investigate and demand information relevant to the administration of the trust from any person.
In Oxer v Astec Paints Australia Pty Ltd  SASC 192, Oxer sought, amongst other things, an order that the Court appoint an inspector to investigate the administration of the Unit Trust due to allegations that the director of the Defendant had not acted impartially between the unit holders. The Court said that the appointment of an inspector under section 84C of the Act to investigate the affairs of the trust will be expeditious and economical to achieving the objective of obtaining information and documents necessary to see whether there is a proper basis for some claim for substantive relief against a trustee.
In light of the above, it is important that:
In circumstances where trustees have been asked to provide documents pursuant to section 84B of the Act, there are some documents that do not need to be provided to beneficiaries as they may be confidential.
It is recommended that a trustee and/or beneficiary seeks legal advice in relation to any request or application that is made regarding the inspection of records relating to the trust to avoid a possible application by the beneficiaries to remove you as trustee.
 Maguire v Makaronis (1997) 188 CLR 449 at 463, quoting Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 68 (Gibbs CJ).
 Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 96-7 (Mason J).
 Trustee Act 1936 (SA) s 84B.
 Trustee Act 1936 (SA) s 84B(1).
 As long as the trust instrument permits the delegation.
 Trustee Act 1936 (SA) s 84B(2).
 Trustee Act 1936 (SA) s 84C.
 Trustee Act 1936 (SA) ss 84D-84E.
 Oxer v Astec Paints Australia Pty Ltd  SASC 192 at .
This communication provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Should you wish to discuss any matter raised in this report, or what it means for you, your business or your clients' businesses, please feel free to contact us.